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The effect of financial knowledge and demographic variables on passive and active investment in Chile's pension plan

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  • KRISTJANPOLLER, WERNER D.
  • OLSON, JOSEPHINE E.

Abstract

This paper contributes to research on defined contribution (DC) retirement plans by examining how financial knowledge and demographic factors influenced Chile's pension holders' choice between a default life-cycle retirement plan and active management. About one third of Chileans held default funds in 2009; younger people, men, people with lower incomes, and people with low financial knowledge were more likely to choose the default. For active investors, we examined what variables influenced their choice. Nearly three quarters of active investors chose more risky funds that the defaults for their age group. However, risk taking tended to decrease with age and to increase with income, financial knowledge and risk tolerance.

Suggested Citation

  • Kristjanpoller, Werner D. & Olson, Josephine E., 2015. "The effect of financial knowledge and demographic variables on passive and active investment in Chile's pension plan," Journal of Pension Economics and Finance, Cambridge University Press, vol. 14(3), pages 293-314, July.
    • Handle: RePEc:cup:jpenef:v:14:y:2015:i:03:p:293-314_00
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    Cited by:

    1. Levkov Nikola & Bogoevska-Gavrilova Irena & Trajkovska Milica, 2022. "Profile and Financial Behaviour of Crypto Adopters – Evidence from Macedonian Population Survey," South East European Journal of Economics and Business, Sciendo, vol. 17(2), pages 172-185, December.
    2. Marcela Parada-Contzen, 2020. "Crowding-out in savings decisions, portfolio default adoption and home ownership: evidence from the Chilean retirement system," Review of Economics of the Household, Springer, vol. 18(2), pages 543-569, June.
    3. Azra Zaimovic & Anes Torlakovic & Almira Arnaut-Berilo & Tarik Zaimovic & Lejla Dedovic & Minela Nuhic Meskovic, 2023. "Mapping Financial Literacy: A Systematic Literature Review of Determinants and Recent Trends," Sustainability, MDPI, vol. 15(12), pages 1-30, June.
    4. Fong, Joelle H., 2020. "Taking control: Active investment choice in Singapore’s national defined contribution scheme," The Journal of the Economics of Ageing, Elsevier, vol. 17(C).

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